Sunak lowers fuel tax and promises lower income tax

The reduction in the fuel tax will reduce the cost of filling an average tank, which has risen to £ 98.43 for diesel and £ 91.87 for petrol, by just £ 3.30, according to the RAC Fuel Watch.

Engine groups welcomed the fuel tax cut, which is only the second time in the last 20 years that the rate has been reduced.

Ministers have frozen the fuel tax since 2011 to 57.95pa liters, in a move that proponents estimate has saved motorists £ 100bn over the decade.

“The Chancellor has been driven to the rescue of British families and businesses using their vehicles, not for pleasure, but to function in their daily lives,” said AA President Edmund King.

“Since the beginning of the year, the 20p-a-liter rise in pump prices has been the shock that shook families’ finances, and especially young drivers, retirees and low-income workers who need to commute every day.”

Ian Plummer, AutoTrader’s commercial director, said a more generous cut would have been difficult for the chancellor. He added: “In a climate of record high pump prices, drivers may struggle to register the chancellor’s giveaway, but the declaration had to find a difficult balance between helping families and protecting public finances after the pandemic.”

However, the RAC warned that prices may not be passed on immediately.

“In fact, a reduction of it by 5p will only bring prices back to where they were a little over a week ago,” said Police Director Nicholas Lyes.

“With the cut taking effect at 6pm tonight, motorists will only notice the difference at the pumps once dealers have bought new fuel in at the lower price.

“There is also a very real risk that retailers may just absorb some or all of the tariff reduction themselves by not lowering their prices. If this turns out to be the case, it will be tough for drivers.”

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